Dito CME eyes stock rights offering to raise P8B

Telecom challenger Dito CME Holdings Corp. plans to raise around P8 billion from the sale of new shares to existing shareholders to fund capital outlays for its infrastructure and to scale up allied digital businesses.

In a recent interview with Inquirer, Ernesto Alberto, president of Dito CME, said the capital call would be done through a stock rights offering within a price range of P6.11 to P7 per share.

“It’s at a discount to [how much it is] today, albeit price has been depressed not only for Dito shares, but the entire market. And we’re hoping that the rest of the year would have better prospects for the market,” Alberto said.

As of Friday, Dito’s share price at the stock exchange closed at P7.04 per share, giving the company a market capitalization of about P100.5 billion.

Dito CME is targeting to secure approval from the Securities and Exchange Commission and the Philippine Stock Exchange for the stock rights offering sometime this December.

A little over one billion of Dito’s shares would be offered to existing shareholders, Alberto said.

About 80 to 85 percent of the proceeds would fund capital expenditures for the telco business under Dito Telecommunity (Dito Tel) while the remainder would be for other digital businesses.

As of last week, the country’s newest telco registered a mobile subscriber base of 3.6 million while its network covered 56 percent of the population.

Apart from the flagship telecom business, Dito was investing in a string of allied businesses, including education technology platform Luna Academy, market communications and media solutions provider Global Acuity and artificial intelligence-driven data analytics provider Unalytics, said Dito CME chief operating officer Donald Lim.

Asked how soon Dito could break even, Joseph Ong, chief financial officer of Dito, explained that if the company would be able to sustain its current pace of growth, “we should be within the striking distance in about three to five years. This is talking about [being] net income-positive.”

Making a return on investment would take longer, he said.

Ong also noted that while the digital businesses were smaller compared to the telco, these were “promising and very relevant” and could start delivering profits by next year.

Dito, controlled by the group of Davao businessman Dennis A. Uy in partnership with China Telecom, believes that it is well-positioned to benefit from the country’s robust industry dynamics in telco and digitalization despite the already high mobile penetration rate. “There is definitely more than enough room for another player, and there are gaps in the market and in the industry that Dito Tel aims to bridge. One of them is low tower density per million subscribers,” said Nerissa Ramos, chief strategy officer of Dito CME.

—Doris Dumlao-Abadilla INQ